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[2020] FWC 3968
plaintiff. Commissioner found that Ms Cowley was dismissed by being forced to resign (constructive dismissal), that the dismissal was not consistent with the Small Business Fair Dismissal Code, and that the...
The Fair Work Commission found that Ms Cowley was constructively dismissed by Van Eyk Horses after the employer unilaterally sought to change her contract, advertised and interviewed for her role, removed key managerial responsibilities, publicly accused her of misconduct without inquiry, and demanded return of a horse. The Commission held there was no valid reason for dismissal, the Small Business Fair Dismissal Code was not complied with, and the dismissal was harsh, unjust and unreasonable. The Commission declined to order reinstatement and directed further submissions on compensation [56, 60, 72, 79-83].
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Ms Isabelle Cowley was employed at Van Eyk Horses' Lancefield farm from 12 February 2018 and became Farm Manager. On 31 January 2020 Van Eyk Horses emailed revised contracts to three farm employees, including Ms Cowley, purporting to alter working hours and other terms [6-11]. The revised contract for Ms Cowley proposed, among other things, specified daily hours amounting to a reduction of half an hour per day, a 37.5 hour weekly cap, a change in title from Farm Manager to Rider (with a new position description), and a change in reporting line [8]. The employer contends the changes were meant only to reduce daily hours by half an hour and that other alterations were a mistake; the Commissioner analysed the contemporaneous evidence and concluded the changes (or contemplated changes) were deliberate, or at least in contemplation, and not simply typographical errors [11-17].
After employees pushed back against the emailed contracts, Van Eyk Horses advertised the Lancefield Farm Manager role publicly on the evening of 1 February 2020 [19-21]. Management then called a meeting on 3 February 2020 (with head office joining by phone) and required daily task lists and tighter oversight of Ms Cowley’s activities; from that time head office effectively took control of horse movements and the detailed timing of daily tasks previously within the farm manager’s remit [25-31]. On 4 February 2020 a payroll dispute about weekend feeds led to accusations against Ms Cowley that she had pocketed funds intended for weekend feeds; Van Eyk Horses did not inquire or give Ms Cowley a fair opportunity to respond before drawing adverse conclusions [30-37]. A meeting on 5 February 2020 involved sustained criticism of Ms Cowley in front of another employee and the Commission preferred Ms Cowley’s account that the meeting was intimidating and undermining [42-46]. Ms Cowley then took stress leave and, on 7 February 2020, resigned giving two weeks’ notice, which was accepted 17 minutes later. A replacement commenced on 11 February 2020 [50-55]. The Commissioner concluded that the employer’s conduct left Ms Cowley with no effective choice but to resign, and thus she was dismissed for the purposes of the Fair Work Act [56].
The core legal question was whether Ms Cowley had been dismissed: either by direct termination or effectively forced to resign by the employer’s conduct. The Commission applied the established concept that an employee is dismissed when they are terminated by the employer, or compelled to resign because of the employer’s conduct [4]. The Commissioner examined the sequence of actions from 31 January to 7 February 2020 as a whole: unilateral or contemplated changes to contractual terms, advertising and interviewing for the role, removal of key managerial discretion (notably time management and horse movements), public accusations of misconduct without inquiry, termination of an ancillary weekend-feeding arrangement, and the demand to return a horse [28-40, 52-55]. Those acts taken together pointed to a course of conduct intended to, or having the effect of, removing Ms Cowley from her managerial role and preparing a handover to someone else; the Commissioner described the daily reporting requirement as "having the appearance of preparing a handover of duties" [28].
On the merits of whether the employer had a valid reason related to capacity or conduct, the Commissioner considered each asserted ground and found none established. The refusal to accept altered hours was not properly a disciplinary issue because converting full-time to part-time required agreement [63]. The weekend-feeds issue involved a subcontracting understanding and did not amount to dishonesty by Ms Cowley; the Commissioner preferred the evidence that the arrangement sat outside the employment contract and that Ms Cowley had not withheld funds [31-35, 64-65]. Requests for weekly updates may have been valid concerns but were not pursued earlier and at most warranted a warning rather than dismissal [66]. Several asserted failures (safety issues; hostility in a phone call; preparation for championships) were not established on the evidence [69-71]. Procedural fairness was absent: Ms Cowley was not informed she was at risk of dismissal, was not given meaningful opportunity to respond, was not provided warnings, and was criticised publicly in a meeting [36, 59, 73, 75]. For these reasons the Code was not complied with, there was no valid reason for dismissal, and the dismissal was unjust, unreasonable and unfair [60, 72, 79-80].
The Commissioner recognised Van Eyk Horses was a small business and had limited HR expertise, which could explain some shortcomings in process, but concluded that these factors did not outweigh the lack of valid reason and the significant procedural failures [76-79]. On remedy, reinstatement is the primary relief under the Act, but the Commissioner considered reinstatement inappropriate given the damaged personal relationships and practical impacts of the COVID-19 pandemic, and directed further submissions on compensation [81-83].
Before this decision, Australian unfair dismissal law recognised that a resignation induced by an employer’s conduct can amount to a dismissal for the purposes of the Fair Work Act. The Commission here applied that established principle and reaffirmed key procedural requirements even for small businesses. The decision emphasises three points that practitioners should note:
The decision thus confirms and illustrates existing Fair Work Commission approaches without announcing novel legal principles; it is an applied example of constructive dismissal and the balancing of contextual employer limitations against statutory procedural requirements.
Paragraph [56]: "I find that the events ... left Ms Cowley with no effective choice but to resign. Ms Cowley was dismissed ... when she was forced to resign on 7 February 2020." Translation: The Commission concluded the employer's conduct effectively pushed Ms Cowley out of her job; her resignation was not voluntary for legal purposes but amounted to dismissal.
Paragraph [28-29]: The requirement to provide daily, near-hourly accounts and the taking over of horse movements "has the appearance of preparing a handover of duties ... readying the role for another to assume it." Translation: Forcing detailed daily reporting and removing control over tasks is not mere oversight; it looks like management preparing to replace the incumbent.
Paragraph [60]: "The dismissal was not consistent with the Small Business Fair Dismissal Code." Translation: Even though the employer was a small business, it did not follow the Code's standards for how to lawfully dismiss an employee.
Paragraph [72]: "There was no valid reason for Ms Cowley's dismissal, either related to her capacity or conduct or otherwise." Translation: The employer’s stated reasons for pushing Ms Cowley out were either not proved or insufficient to justify dismissal.
Paragraph [81]: "Reinstatement is the primary remedy ... reinstatement may have been the appropriate remedy had it not been for ... the COVID-19 pandemic ... I do not consider reinstatement to be appropriate." Translation: Generally the Commission would order the employee back to work, but practical considerations and the broken relationship here make that unrealistic; compensation will be considered instead.
This decision is most relevant where a cluster of employer actions occur close in time that, taken together, show an intent to remove or replace a manager or where those actions have the practical effect of removing responsibility and preparing for replacement. Triggers include:
Where those elements are present, a tribunal will closely scrutinise whether the employer afforded the employee procedural fairness and had a valid reason for dismissal.
The text of this decision itself does not record subsequent judicial or tribunal treatment. The decision is a fact-sensitive Fair Work Commission determination applying established principles on constructive dismissal and procedural fairness. Practitioners should check later Commission decisions and appellate authorities for any subsequent citation or development. This determination is persuasive authority in similar unfair dismissal matters, particularly with analogous factual matrices of sudden contractual changes combined with recruitment activity and removal of managerial discretion.
The decision resolves liability on these facts, but some areas retain scope for further clarification in other cases:
Practitioners should therefore treat this decision as a fact-driven example of constructive dismissal and procedural analysis, and remain attentive to subsequent decisions that further elaborate thresholds for employer conduct, the weight accorded to small business limitations, and remedies in strained practical contexts.
s.394 - Application for unfair dismissal remedy
The Trustee for the Hawthorn Furphy Farms Trust T/A Van Eyk Horses
Application for unfair dismissal remedy - whether dismissed - whether consistent with the Small Business Fair Dismissal Code - whether harsh, unjust or unreasonable.
[1] Isabelle Cowley worked at the Lancefield farm of Van Eyk Horses for approximately two years, commencing on 12 February 2018. She was employed initially as Team Rider and was quickly promoted to Farm Manager. Having completed the minimum employment period and with a gross annual salary of $50,000, Ms Cowley was protected from unfair dismissal at the time her employment with Van Eyk Horses came to an end on 21 February 2020. There is no suggestion that the employment ended by reason of redundancy, genuine or otherwise.
[2] The termination of Ms Cowley's employment followed her resignation on 7 February 2020 with two weeks' notice. Ms Cowley says she was forced to resign. Alternatively, she says she accepted the repudiation of her contract by Van Eyk Horses, although neither the date of alleged repudiation nor the terms of the contract said to have been abandoned are identified with any precision. Ms Cowley has applied within time for an unfair dismissal remedy.
[3] Van Eyk Horses says Ms Cowley was not dismissed. Extraordinarily, it accuses her of resigning out of spite so that she could bring this claim to blackmail it into giving her a horse. It also claims no knowledge of why Ms Cowley resigned other than to say that it was for reasons of her own.
[4] A remedy for unfair dismissal is only available to an employee who has been dismissed - that is, by termination of their employment directly by the employer, or in circumstances where the employee was forced to resign as a result of the employer's conduct.[1]
[5] The questions are whether Ms Cowley was dismissed and if so, whether the dismissal was harsh, unjust or unreasonable. For the reasons that follow, I have found that Ms Cowley was dismissed and that the dismissal was unjust, unreasonable and unfair. A further opportunity for submissions on the question of remedy will be provided.
[6] The story begins on 31 January 2020 when Van Eyk Horses announced changes to the working hours of three employees at the Lancefield farm by sending Ms Cowley, Jennifer Agnew (Groom) and Alice Taylor (Rider/Groom) revised contracts of employment and requiring that they sign and return the documents by the following Monday.
[7] In an email to Ms Cowley, Bella Howard (Accounts Department), said this:
Please find attached your revised employment contract.
Please read, sign and return this document by Monday 3rd February.
Please acknowledge your new working hours which have been changed to align with head office.
[8] The email arrived without forewarning and did not provide any explanation for the four significant changes to Ms Cowley's "revised" contract of employment, as follows:
Introduction of specified daily hours of work, from 8.00am to 4.30pm (half an hour less than her ordinary working hours of 8.00am to 5.00pm, not including breaks);
A new limit on weekly hours of work of 37.5 hours; and
A change in position title from Farm Manager to Rider with a new position description;
A change in reporting line from Jo Furphy to Ashleigh and Bella Howard (Ashleigh is Bella Howard's sister and Chief Marketing Officer for Van Eyk Horses. She works closely with Ms Furphy as "2IC").
[9] Similar changes were made to the contract of employment for Ms Taylor:
Revised daily hours of work from 10.00am to 6.30pm (half an hour less than her standard working hours of 9.30am to 6.30pm) with a one hour lunch break;
Removal of two paid 15 minute breaks each day;
Change in position title from Groom/Rider to Rider; and
Increase in annual salary from $40,000 to $43,000 inclusive of superannuation.
[10] The contract of employment for Ms Agnew was also revised. The specific changes are not in evidence other than the change in hours of work to 8.30am to 5.00pm. Ms Agnew saw the revised contract as a downgrading of conditions, putting her back on probation with "no chance of overtime ever" and with open ended hours. Her job description had also changed.
[11] Van Eyk Horses says the changes in relation to Ms Cowley and Ms Agnew were only meant to reduce hours of work by half an hour, while maintaining the same weekly pay, to better align with head office. The other changes were an inexplicable 'mistake' and were later withdrawn. The changes in relation to Ms Taylor were "correct" but were also withdrawn four days later.
[12] As to how the mistake occurred, Bella Howard says she was in a rush to send out the changes on Friday 31 January 2020 after discussing the matter with head office (Ms Furphy and Ashleigh Howard). She cannot describe the process she undertook or how the mistakes were made, and her explanation does not make sense. If it was a rushed 'copy and paste' of a newer standard form contract, how did a change to hours of work result in Ms Cowley's position and reporting line also being downgraded? Instead of Farm Manager reporting to the owner Ms Furphy, the revised contract described Ms Cowley's role as Rider, reporting to Ashleigh and Bella Howard (respectively, one and two steps removed from Ms Furphy).
We are seeking a farm manager. You will assist in the care of the horses. Grooming, lunging, feeding, stable cleaning, paddock pick up and general duties. We have between 5 and 7 horses.
Further information on the role - You must be competent with the handling and care of horses.
Hours - 38 hour week - You will receive all entitlements including holiday pay, sick pay and superannuation. This is not a live in position. Apply today, via messenger. Please include in your application your wage expectation, your available start date, a list of job appropriate experience and a minimum of two references."
[20] This was an advertisement for Ms Cowley's role as Farm Manager without the riding component. The advertisement is specific to Lancefield. It is for a Farm Manager. It can be no coincidence that it outlines almost precisely the same type of duties set out in the contract sent to Ms Cowley on 31 January 2020, without tacking up (perhaps because no riding was required) and with the addition of lunging.
[21] It was the role of "Lancefield Farm Manager" that Lisa Borwick says she applied for in early February 2020 in response to the advertisement - the same role she held at the time she made her first statement in this matter. According to Ms Borwick, the role came with "the freedom to manage the Lancefield property with ongoing support from VEH management." When she started, "there was a manager there but she was leaving", that being "the previous Manager (Isabelle) who had just resigned and was seeing out her notice".
[22] The advertisement was not for a completely different, newly created role across the Lancefield and Merrijig farms, requiring specialist handling skills for many more young unbroken horses than the 5-7 specified in the advertisement. I reject the evidence to that effect. The advertisement makes no mention of a new "young horse program" or the need for "someone with really good handling skills with young stock". Even if that were in contemplation, notes of a meeting on 8 October 2019 indicate that breaking in young horses was intended to form part of Ms Cowley's role together with the prospect of managing horses at the Merrijig farm.
[23] Ms Cowley had been included in the planning and development of new yards to work young horses. She was one of four members of the farm's management team, along with the Howard sisters and Ms Furphy. One would reasonably expect Ms Cowley to have known about plans to create a new role with some significant overlap with her own in that context. She would have been made aware that it was to be advertised. She would likely have been involved in discussions about how the new role would affect her own, including division of responsibility among the two roles. These are matters that would ordinarily have been discussed among the management team of which she was part. Yet while everyone else in the management team knew about the advertisement, Ms Cowley only found out by mistake when it was brought to her attention by Ms Agnew who happened upon it by accident.
"Thanks Isabelle, to gauge staffing requirement we will now run work lists. This will help inform us of the number of staff required. Please come back to me with everyone's tasks for the day. Meaning yourself, Jenny and Alice. If you could do this today we will contact you about timing for each job. We plan to work with you to develop weekly task lists."
[28] It is hard to reconcile this message, and the subsequent communications between Ms Cowley, Ms Furphy and Ashleigh Howard, with the submission that there was no change to Ms Cowley's role of Farm Manager until after she resigned on 7 February 2020. From 3 February 2020, Ms Cowley was no longer responsible for horse movements and she was required to document her own tasks and movements, as well as those of the two employees she had previously had responsibility for managing, even including when lunch breaks were taken. The purpose of the requirement was so that head office could "work with her to develop weekly task lists", including the timing of particular tasks each day; to "manage the time everything's taking", to "develop a schedule and plan stock and resource levels accordingly". It has the appearance of preparing a handover of duties, readying the role for another to assume it by recording the regular daily activities of Ms Cowley and her team in precise detail. It is to be remembered that by this time, her role had been advertised.
[29] In my view, the changes made to Ms Cowley's duties on 3 February 2020 were fundamental changes to her contract of employment. Time management - that is, deciding who did what each day and when - was a key part of her role as Farm Manager. On and from 3 February 2020, she no longer had this responsibility. The requirement to update head office on happenings at the farm changed from weekly or 'on request' to a daily, almost hour by hour, account. Head office also took over responsibility for horse movements without notice to, or agreement from, Ms Cowley. In other words, her "freedom to manage the farm with the support of Van Eyk Horses" - the very same discretion given to Ms Borwick 8 days later - was removed.
[30] As to the reason why, the first light shed on this question is found in notes from Bella Howard dated 5 February 2020. It records her advice to Ms Cowley on 4 February 2020 that because of the issue with Ms Agnew not being paid for weekend work, head office believed she was "not managing the employees or updating head office as she should be". Whether that was a valid concern depends on the terms of Ms Agnew's contract of employment.
[31] Ms Agnew says it was a requirement of her role that she feed the horses one weekend per month. Ms Cowley says the annual amount of $10,000 she was paid for weekend feeds was insufficient to cover the additional one weekend a month she understood was required of Ms Agnew. In any event, she believed it was part of Ms Agnew's contract of employment to undertake monthly weekend feeds, as did Ms Agnew. Ms Cowley's contract of employment makes no mention of weekend feeds, presumably because the arrangement for weekend feeds was considered separate to the employment as a subcontracting arrangement between Van Eyk Horses, Ms Cowley and her mother.
Was the dismissal consistent with the Small Business Fair Dismissal Code?
[57] Immediately before the dismissal on 7 February 2020, Van Eyk Horses says it had six employees working for the business and a further 6 employees employed by associated entities. In the absence of any evidence to the contrary, I accept the submission. Van Eyk Horses was a small business employer at the time.
[58] This is not a case of summary dismissal. Had it been, for the reasons above I would find that Van Eyk Horses held a belief that Ms Cowley had engaged in misconduct in relation to the weekend feeds arrangement. The belief was not, for the reasons above and objectively speaking, based on reasonable grounds.
[59] As a form of 'other dismissal', Ms Cowley was not told she was at risk of being dismissed or given reasons for that advice. She was not warned that dismissal may occur if there was no improvement in her performance. As a result, she had no reasonable opportunity to respond or to rectify any perceived problems.
[60] The dismissal was not consistent with the Small Business Fair Dismissal Code.
Was the dismissal harsh, unjust or unreasonable?
Was there a valid reason for the dismissal related to capacity or conduct?
[61] Van Eyk Horses set out its concerns in relation to Ms Cowley's conduct and performance in the meeting on 5 February 2020. These were (in order):
Refusal to abide by a direction to work different hours of work;
Failing to pay Ms Agnew for weekend feeds and keeping the money for herself;
Failure to keep head office informed in relation to weekend feeds;
Failure to take responsibility for the underpayment of Ms Agnew;
Failure to send through weekly updates of all horses on the property under her care, including a weekend riding schedule;
Failure to manage staff, ensure company direction was followed and monitor works on the property;
Failure to make head office aware of horse health, horse safety and employee safety;
Being hostile and rude to Bella Howard in a phone call on 3 February 2020;
Poor preparation of horses leading to absence from the National Young Horse Championships; and
Failure to action items from 8 October 2019 meeting.
[62] I address each in turn.
Refusal to abide by a direction to work different hours of work
[63] Ms Cowley did not agree to the change in her hours of work which would have converted her employment from full time to part-time. In my view, it was not a reasonable direction because it resulted in a change in the type of her employment. This was a matter that required agreement between the parties. Failure to agree in this circumstance did not give rise to a valid reason for dismissal.
[64] In this group are items 2, 3 and 4 above. Nothing of what occurred in relation to the weekend feeds arrangement was a valid reason for the dismissal of Ms Cowley, including because it involved a subcontracting arrangement between Van Eyk Horses, Ms Cowley and her mother, and separately, between Van Eyk Horses and Ms Agnew.
[65] Ms Cowley had no obligation to pay Ms Agnew in relation to weekend feeds. She was not dishonest in her dealings in relation to the matter. She did not fail to keep head office informed in this regard - she did what she understood had been agreed between Van Eyk Horses and Ms Agnew and negotiated with Ms Agnew to ensure that all weekend feeds were covered.
Weekly updates of horses and riding schedules and failure to action items from 8 October 2019 meeting
[66] In this group are items 5 and 10 above. Ms Cowley provided updates to head office as and when requested. She did not do so weekly, despite this request being made of her on 8 October 2019. The minutes from 5 February 2020 indicate that she may have considered it unnecessary. I accept that Van Eyk Horses may have held a valid concern in this regard and in relation to other actions discussed between the parties on 8 October 2019. Its evident failure to follow up on this concern at any time between 8 October 2019 and 5 February 2020 suggests that it acquiesced to Ms Cowley's approach in this regard. At best, the matter may have warranted a warning. It was not a valid reason for dismissal.
Failure to manage staff, ensure company direction was followed and monitor works on the property
[67] This concern is so generally worded that it is difficult to understand with any precision. The weight of evidence supports a conclusion that Ms Cowley was generally well regarded in her role as Farm Manager, including by Ms Furphy, at least for a time. To the extent that the concern relates to failure to ensure that Ms Cowley, Ms Agnew and Ms Taylor complied with the direction to work different hours of work, or to the weekend feeds arrangement, I have dealt with each above so far as they relate to Ms Cowley.
[68] It was not Ms Cowley's responsibility to procure agreement between Van Eyk Horses and other employees for changes to their individual contracts of employment. To the extent that there was no change required to the contracts of employment, she might have been in a position to be more supportive had she been made aware of the changes before they were announced, and absent the various contract-related errors which caused general confusion and alarm. No valid reason for dismissal arises.
Failure to make head office aware of horse health, horse safety and employee safety
[69] Due to a scarcity of evidence, this allegation is not established.
Being hostile and rude to Bella Howard in a phone call on 3 February 2020
[70] This allegation is not established. If it relates to conversations between Ms Cowley and Ms Howard on 4 February 2020, I have dealt with those above. It was not a valid reason for dismissal.
Poor preparation of horses leading to absence from National Young Horse Championships
[71] This allegation is not established.
[72] There was no valid reason for Ms Cowley's dismissal, either related to her capacity or conduct or otherwise. This weighs in favour of a finding of unfair dismissal.
Was the reason notified to Ms Cowley and was she given an opportunity to respond?
[73] As there was no valid reason for dismissal, this criterion is not relevant. If I am wrong about that, Ms Cowley was not given any genuine opportunity to respond to any of the reasons Van Eyk Horses may have had for wanting to bring the employment to an end. This would weigh in favour of a finding of unfair dismissal.
Was there any unreasonable refusal to allow a support person to be present to assist at any discussions relating to dismissal?
[74] There was no unreasonable refusal to allow a support person to be present to assist Ms Cowley at any discussions relating to the dismissal.
Was the Applicant warned about relevant unsatisfactory performance?
[75] There were discussions with Ms Cowley over the period of her employment in relation to things that could be done better, including on 8 October 2019. Ms Cowley was told that she would be given warnings in the meeting on 5 February 2020. However, Ms Cowley was never actually given any warnings and she was never told that her employment was at risk if her performance did not improve. This weighs in favour of a finding of unfair dismissal.
Degree to which the size of the employer's business would be likely to impact on procedures followed in effecting the dismissal
[76] Van Eyk Horses is a small business. In my view this is likely to have had an effect on the procedure followed in effecting the dismissal. There were only three people available to manage the hostile reaction from employees to the contracts they received on 31 January 2020. One of those was Bella Howard, who made the errors. Another was her sister Ashleigh. That left only the owner of the business, Ms Furphy, as not obviously conflicted in her dealings in relation to the matter. It is likely that she relied heavily on the advice given to her by the Howards in forming her own response, but it is clear from her own conduct on and after that time that she did not bring an objective mind to bear. Instead, she chose to support Bella Howard at the expense of Ms Cowley. The size of the business weighs against a finding of unfair dismissal.
Degree to which absence of dedicated human resources management specialists or expertise in the business would be likely to impact on procedures followed in effecting the dismissal
[77] The absence of dedicated human resource management or expertise in Van Eyk Horses' enterprise is likely to have affected the procedures followed by Van Eyk Horses in relation to the dismissal. Indeed, Van Eyk Horses says it has since engaged human resources support, to assist Bella Howard in her administration of the business. This weighs against a finding of unfair dismissal.
[78] A number of witness statements were filed in the matter which endorse Ms Cowley's capacity as Farm Manager and are highly critical of Ms Furphy having regard to past dealings with mostly former employees. To the extent that the evidence has the sole or primary purpose of seeking to impugn the character of Ms Furphy, I have given it little weight.
[79] On balance, the lack of valid reason and significant procedural failures leading to the dismissal outweigh the disadvantage to Van Eyk Horses in giving it effect, attributable to its size and lack of resources.
[80] I find that the dismissal of Ms Cowley was unjust and unreasonable. It was unfair.
[81] Reinstatement is the primary remedy available under the Act. In my view, reinstatement may have been the appropriate remedy had it not been for the changes wrought by the COVID-19 pandemic because at the time of hearing, Ms Cowley was unemployed and there are few similar roles in the area in which she lives and works. However, I am concerned about the prospect of restoring a harmonious and productive working relationship between the parties in light of what has occurred and where much depends on the restoration of personal relationships that have suffered greatly from the events on and from 31 January 2020. On balance, I do not consider reinstatement to be appropriate.
[82] The current and likely impact of the pandemic on both the business and Ms Cowley's prospects for future employment warrant a further opportunity for submissions on the question of whether compensation is appropriate and if so, the amount of compensation.
[83] Directions will issue separately.
[1] Fair Work Act 2009 (Cth), ss 385(a), 386.
Printed by authority of the Commonwealth Government Printer
Ms Isabelle Cowley
The Trustee for the Hawthorn Furphy Farms Trust T/A Van Eyk Horses [2020] FWC 3968
Commissioner found that Ms Cowley was dismissed by being forced to resign (constructive dismissal), that the dismissal was not consistent with the Small Business Fair Dismissal Code, and that the dismissal was unjust, unreasonable and unfair. Directions issued for further submissions on remedy; reinstatement was not ordered as inappropriate in the circumstances [56, 60, 72, 79-83].
[13] These errors cannot have occurred by simply "pulling" Ms Cowley's original title into the new contract, as that title was "Equine Professional, RIDER", not Rider. It was not an error made due to lack of familiarity with the role. Ms Howard had regular interactions with Ms Cowley and was responsible for payroll and accounts for a relatively small team. She knew well that Ms Cowley was the Farm Manager.
[14] The errors are not explained by Ms Howard copying the more recent contract of employment for Alice Taylor and modifying it for Ms Cowley. If she had, the position title in Ms Cowley's contract would have read either "Groom/Rider" (Ms Taylor's title before her contract was amended), or "Groom" (Ms Taylor's title after her contract was amended), but not "Rider".
[15] It is at least certain that Ms Taylor's contract was deliberately altered. In a meeting on 5 February 2020, Ms Furphy confirmed that the changes in Ms Taylor's contract of employment were correct. The changes included removal of riding duties from her role and position description, removal of two paid 15 minute breaks and an increase her salary - the latter two changes presumably intended to better align and resolve potential non-compliance with the Horse and Greyhound Training Award 2010.
[16] The draft contract for Ms Cowley contains the same position description as Ms Taylor but with riding duties. It is also similar in terms of reporting line although it necessarily substitutes Ms Cowley with another, being Ashleigh Howard. These similarities suggest a sequence of events that saw Ms Taylor's original contract being copied and saved as Ms Cowley's draft contract, which was then amended to suit.
[17] This, together with the lack of any alternative viable explanation, leads me to conclude that the changes to Ms Cowley's contract of employment on 31 January 2020 were also deliberately made. The reason for the changes other than in relation to hours of work is not apparent from the evidence. Having regard to a text message exchange between the Howards and Ms Furphy after the 'pushback' from employees on 1 February 2020, I accept that Ms Howard made a mistake in sending out new contracts to Ms Cowley and Ms Agnew which altered more than their hours of work. I infer that the additional contract changes were in contemplation and had been discussed between Ms Furphy and the Howard sisters but had not yet been implemented.
[18] At 5.23pm on 1 February 2020, Ms Cowley emailed Bella Howard to advise that she was not prepared to sign the new contract. She requested a meeting to negotiate the proposed changes. Ms Howard must then have spoken to Ms Furphy and Ashleigh Howard about resistance from Ms Cowley as well as Ms Agnew to the proposed changes. A text message exchange refers to telling "them both" that there was no change to the contract and no need to sign it. What else was discussed is not in evidence. At 8.11pm, Bella Howard forwarded them a copy of Ms Cowley's email.
[19] Perhaps it was shortly after this time that Ms Furphy spoke with her partner about how difficult it was to find "the right people" because at 9.33pm on 1 February 2020, Van Eyk Horses advertised the role of "Horse Farm Manager" on her partner's website "Third Drawer Down". The advertisement was as follows:
[24] On 2 February 2020, there was an angry conversation between Bella Howard and Ms Agnew prompted by the proposed changes to her own contract of employment. Ms Agnew said she had not been paid for weekend work and that she was being underpaid. As the person responsible for payroll, Ms Howard found this surprising. She was under the impression that Ms Cowley was paid for the weekend work and was responsible for paying whoever did the work on her behalf if she delegated the task on a given weekend, as was common practice. She told Ms Agnew as much and also told her to disregard the new contract as her original contract stood.
[25] At or about 9.00am on 3 February 2020, there was meeting of the management team including Ms Cowley at the Lancefield farm, with Ashleigh Howard and Ms Furphy joining by telephone. Ms Cowley was told that the contract changes were mostly typographical errors and the change in working hours was to suit head office hours. Concerns were then raised about Ms Cowley's work performance in a manner that Ms Cowley describes as aggressive. Ms Cowley says she had never received negative feedback before and was shocked, although this was not the first time negative feedback had been given. Issues had been raised in the past in the form of feedback from head office (see, for example, the notes of a meeting on 8 October 2019).
[26] The 8 October meeting notes suggest that Van Eyk Horses had held and expressed some concerns about Ms Cowley's management of the farm approximately four months earlier. There is no evidence that it had taken any formal steps to deal with the concerns after that time. Ms Cowley had also received positive feedback since, so it is understandable that she found the overall tone of the meeting upsetting.
[27] Later that morning, Ms Cowley sent a photo of the whiteboard used to manage daily farm tasks to the management team chat group. Ms Furphy replied as follows:
[32] Van Eyk Horses says the requirement to undertake weekend feeds was not in Ms Agnew's contract of employment and any reference to weekend feeds in her job description was 'at the Manager's discretion', which meant Ms Cowley was responsible for paying her if she exercised this discretion and asked Ms Agnew to work. It asserts that the weekly payment of $192 made to Ms Cowley covered all weekend feeds, including any done by Ms Agnew. A quick calculation reveals that $10,000 divided by $192 equals approximately 52, corresponding to the number of weeks in a year.
[33] However, both Ms Cowley and Ms Agnew operated on the understanding outlined above at [31], negotiating between themselves which weekend of the month Ms Agnew would work with Ms Cowley taking responsibility for the rest. Neither had any expectation that Ms Cowley was responsible for payment of Ms Agnew. Consistent with this understanding, when Ms Cowley delegated the task to others on weekends for which she was responsible (that is, the weekends Ms Agnew was not working) she paid them accordingly.
[34] I prefer the evidence of Ms Agnew and Ms Cowley. If weekend feeds were exclusively the responsibility of Ms Cowley in her capacity as contractor, there is no reason for monthly weekend feeds to be contemplated in Ms Agnew's job description in her capacity as employee. Any such arrangement would sit outside the employment relationship (that is, by Ms Cowley subcontracting to Ms Agnew). It would not be a matter of Ms Cowley's managerial discretion in her capacity as Farm Manager.
[35] I find that when Ms Agnew raised the issue of underpayment of wages, Bella Howard wrongly assumed that Ms Cowley had been pocketing money for weekend feeds to which she was not entitled. In reality, she had erred in her interpretation of Ms Agnew's contract of employment while administering the payroll, resulting in an underpayment of wages. Rather than acknowledge this possibility, she shared her concerns about Ms Cowley's misconduct with Ms Furphy and Ashleigh Howard and together they concluded that Ms Cowley had failed to manage properly and keep head office informed.
[36] Ms Cowley was not given the benefit of the doubt and nor was any potential for misunderstanding acknowledged. She was not even asked what had happened. When the issue was first put to Ms Cowley on 4 February 2020 it was in the form of accusation and conclusion. There was no inquiry. There was no opportunity to respond. The die was cast.
[37] It is no wonder then that the communication between Ms Cowley and Ms Howard on 4 February 2020 was less than cordial. Ms Cowley had that morning received her payslip, further adding to the confusion by showing different hours of work and a reduced hourly pay rate (itself a payroll error, derived from dividing the weekly wage by 38 instead of the reduced weekly hours of 37.5). After asking why her terms and conditions of employment had changed, she was accused of misconduct and misappropriation. The weekend feeds arrangement was terminated at a cost to Ms Cowley of approximately 15% of her annual earnings. Ms Howard was no wilting violet in the exchange. I do not accept that the exchange amounted to bullying of Ms Howard by Ms Cowley. To the extent that the exchange was robust, the two contributed in equal measure.
[38] Rather than seek to calm the situation, Van Eyk Horses opted for an escalation strategy. Bella Howard called Ms Cowley later that day, in my view under instruction from Ms Furphy, to advise that the business had decided to keep the horse 'CJ' and she was required to return it the following day. The horse had been in Ms Cowley's possession for approximately one month and she had understood it to be a gift - a sore horse of no value to the business but of value to Ms Cowley if she could afford to maintain and care for it. The request was confirmed in writing at 5.31pm. This was the first time Van Eyk Horses had clearly stated its position in relation to the horse in writing despite several attempts by Ms Cowley since December 2019 to confirm the transaction between them.
[39] At 7.26pm on 4 February 2020, Ms Cowley replied. She asked Van Eyk Horses to reconsider its position in relation to the horse based on their verbal agreement. She put her position in relation to the weekend feeds and apologised for what she said was a misunderstanding. She expressed dismay about why head office was so upset with her and said she was upset and devastated about being verbally attacked in the meeting the day prior and how she was perceived. She ended the email with "I hope we can all moved [sic] past this".
[40] By this time, Ms Cowley was considering resigning but did not want to. Subsequent correspondence ensued in relation to return of the horse, with Ms Howard formally requesting his return and Ms Cowley refusing, asserting legal ownership. It ended with Ms Cowley advising that she would "continue to perform" her duties under her "original employment agreement at work" - which I take to mean that she did not accept any of the proposed changes to her contract of 31 January 2020 including the varied hours of work and nor did she accept what might have been a repudiation of her contract by Van Eyk Horses on 3 February 2020 when her duties were downgraded.
[41] In the background to this exchange, and also on 4 February 2020, Ms Borwick was interviewed for Ms Cowley's role.
[42] On the morning of 5 February 2020, Ms Cowley was riding a horse at work when Ms Furphy and Ashleigh Howard arrived at the farm. A meeting was called in the shed. Ashleigh Howard took minutes. Employees were told that the meeting was for Ms Furphy to get an understanding of why there was so much 'push back' to head office about the contract changes.
[43] Ms Furphy spoke for approximately 40 minutes. Responses elicited from the team were quickly shut down. Ground covered included the contracts sent out (by mistake to Ms Cowley and Ms Agnew), the requirement for employees to change their hours and that warnings would be issued for not following company directions. Ms Taylor was asked to leave the meeting and then Ms Furphy continued to chastise Ms Cowley in front of Ms Agnew about the weekend feeds arrangement and her various alleged failures as Farm Manager. Ashleigh Howard chimed in, blaming Ms Cowley for the company missing out on the National Young Horse Championships due to her poor preparation and failing to action or complete action points from the meeting on 8 October 2019. Return of the horse 'CJ' was again requested and refused.
[44] Ms Furphy says she did not raise her voice during the meeting and was not aggressive. She describes the meeting as a 'chat' and one in which she was trying to be conciliatory while dealing with things that were "slipping" at the farm. She says the outcome was positive. Ms Howard says Ms Furphy was calm during the meeting and did not raise her voice. Her minutes record that the meeting ended 'on a good note'.
[45] In stark contrast, Ms Cowley says the meeting made her feel intimidated and small and left her really upset. Ms Agnew described it as horrible, horrendous and a "bullying, offensive barrel of bellowing" from Ms Furphy. Again I prefer the evidence of Ms Cowley and Ms Agnew, this time as to the tenor of the meeting. Their evidence is more credible than that of Ms Furphy or Ms Howard when set against what was recorded in the minutes and when considered in context.
[46] By any measure, the approach of Ms Furphy and Ms Howard in the meeting on 5 February 2020 was unreasonable. If Van Eyk Horses had legitimate concerns about Ms Cowley's performance as Farm Manager, it could have raised those with her directly in a confidential setting at any time, so as to support her to improve and meet its expectations. Indeed, it had already discussed its concerns with Ms Cowley two days prior.
[47] When Bella Howard made the contract mistakes, triggering a series of events culminating in the resignation of all three farm employees, she was given assistance and additional support.
[48] The same cannot be said for the treatment of Ms Cowley. She was not given the benefit of the doubt. She was not given additional support. Instead, Van Eyk Horses openly declared it had no confidence in her management of the farm. It berated her in front of Ms Agnew, undermining and embarrassing her. There was nothing calm or conciliatory about it. In addition to a litany of other alleged failures, it effectively accused her of dishonesty without proper cause when what occurred in relation to the weekend feeds arrangement was simply a misunderstanding.
[49] After the meeting on 5 February 2020, Ms Cowley tried to carry on as normal but she was too upset. She rang her mother and took the next two days off on stress leave. She attended her doctor who advised her not to return to work. It was then that she decided to resign.
[50] On 7 February 2020, Ms Cowley emailed her notice of resignation, saying "I feel like the way I have been treated in the last week leaves me no option but to hand in my resignation and give you two weeks' notice."
[51] Ashleigh Howard accepted her notice 17 minutes later. While Ms Furphy says she did not want Ms Cowley to leave, she made no attempt to ask her to stay and she had no need to. She had already interviewed her replacement. That she could not fathom what Ms Cowley meant in her letter of resignation is rejected.
[52] To recap, over the period from 31 January 2020 to 5 February 2020, and in its capacity as her employer, Van Eyk Horses:
Contemplated demoting Ms Cowley from Farm Manager to Rider;
Advertised Ms Cowley's position (modified to exclude riding duties) without telling her;
Interviewed a replacement for the position;
Removed Ms Cowley's managerial discretion in relation to time management and horse movements;
Unilaterally changed her employment from full time to part-time (37.5 hours) and advised that she would be given a warning for failing to accept the change;
Denied her procedural fairness in relation to serious accusations of misconduct; and
Berated her in front of another staff member, accusing her of management failures and dishonesty.
[53] Separately, it terminated the weekend feeds arrangement representing approximately 15% of Ms Cowley's annual income and demanded the return of a 'gift' horse.
[54] Almost as soon as Ms Cowley resigned, Ms Borwick was offered and accepted the job of Farm Manager. She commenced work on Tuesday 11 February 2020. By that time Ms Cowley's duties had been downgraded from any pretence of managerial duties to general farm labour. The sequence of events explains why Ms Borwick found the workplace environment 'toxic' upon arrival.
[55] Ms Cowley did not work out her notice, instead taking sick leave until her notice period expired. She did so in the context of Van Eyk Horses actively taking steps to replace her as Farm Manager, while simultaneously and clearly communicating to her that it no longer had confidence in her ability in that role.
[56] I find that the events from 31 January 2020 to 5 February 2020 constituted a course of conduct by Van Eyk Horses that left Ms Cowley with no effective choice but to resign. Ms Cowley was dismissed by Van Eyk Horses when she was forced to resign on 7 February 2020.